Iranians Prepare to Duck and Cover

If you live in Iran and have access to the international news you are probably looking for a remote section of countryside in which to hide. It was discovered this week that the U.S. is shipping nearly 400 highly specialized bunker buster bombs to its staging base in Diego Garcia. You can bet they are eventually headed to Iran.

The U.S. navy contracted to Superior Maritime Services for $699,500 to take a shipload of ordnance and supplies to Diego Garcia. Among the items in the shipment are 195 smart, guided, Blu-110 bombs and 192 of the larger 2000lb Blu-117 bombs.

These bombs only have one purpose and that is penetrating deep into hardened enemy bunkers and destroying them underground. According to Dan Plesch, director of the Centre for International Studies in London, U.S. bombers are ready today to destroy 10,000 targets in Iran in a matter of hours. I think Mr. Plesch may be exaggerating somewhat but I have no doubt the U.S. could do that if so ordered. I just doubt that order will ever come down.

Picture of a BLU penetrator variant. Exact model unknown

I think the key point here is that the U.S. purposefully let the cargo manifest be known by letting it be posted with other traffic manifests on a shippers website. Why would the U.S. Navy let this kind of information be released to the general public if it was not meant to eventually find its way into the Iranian press?

The U.S. Navy uses civilian shippers all the time to move ordnance and supplies but the equipment lists, the ship being used for transport and the contents of sealed containers never get posted for the general public to view.

This is a clever way to warn Iran that eventually they will either have to cease enrichment or have it stopped permanently by military force.

It is also a message to Israel that the U.S. is preparing to take action and a warning to Israel that they should not act first.

Diego Garcia is located in the Indian Ocean and is used as a staging base for operations in the Middle East. It has 3,200 U.S. personnel and is furnished with the latest in hangars for stealth bombers. The Scottish Sunday Herald reported in 2007 that the stealth bomber hangars on the island were being equipped to handle the larger bunker buster bombs.

Obviously this does not mean the U.S. is planning on attacking Iran. They may only be stocking up for future skirmishes with enemies that have deep concrete hardened bunkers. They may also be stocking up for some cave drops in Afghanistan should an appropriate al-Qaeda target appear.

Regardless of where these bombs will eventually be used the reason for the publication of the manifests is clear. It is a message to Iran and Israel.

Iran announced today it was going to boost gasoline production by 14 million liters per day to offset the increasingly pesky sanctions. Now, if you believe that Iran can simply boost production by 14 million liters just because they want to then you will probably believe those bombs were going to be used to dig a lake in the Saudi desert.

Iran currently produces 44.7 million liters of gasoline a day from its seven refineries. In the past Iran has imported a third of its gasoline because it did not have the capacity to produce more. Instead of using their own cheap oil they were forced to import 22 million liters of expensive gasoline and then supply it to their citizens at a subsidized price that was even less than the import price. In other words they lost money on every liter because they did not have the capacity to refine their own.

Now, only three weeks since the U.N. nations clamped down on their gasoline imports they suddenly have the additional capacity to refine another 14 million liters per day. Reportedly they are completing renovations at their Abadan and Shazand refineries sometime next year and those refineries will begin producing an additional 11.6 mlpd. I have to believe the announcement of this new capacity appeared at a very opportune time.

All of this news centered on Iran will continue to keep a security premium in the price of oil. Some analysts believe the next acceleration of news will come in April as the Security Council stiffens its resolve against Iran. China has been a holdback on new sanctions but this week they seemed to be wavering. They urged Iran to accept current proposals for resolving the situation so that demands for new sanctions would ease. China is finding that other Arab states that export energy to China are becoming increasingly aggressive in their demands for China to agree to sanctions. China does not want to anger Iran and has protected them but when faced with angering Saudi Arabia and others it appears China is suddenly becoming more agreeable. I doubt it will make any difference to Iran because they are locked in this death spiral and to relent now would show weakness.

Count on the Iranian security premium to remain in place and increase as we move into the second quarter.

Jim Brown

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